United States v. Gaver

United States District Court, D. Maryland

July 19, 2018

UNITED STATES OF AMERICAv.MARK GAVER, Defendant.

MEMORANDUM ORDER

Richard D. Bennett United States District Judge

Defendant
Mark Gaver (“Defendant” or “Gaver”)
was the sole owner, President and Chief Executive Officer of
Gaver Technologies, Inc. (“GTI”), an information
technology support and personnel staffing corporation located
in Frederick, Maryland. (Indictment, ECF No. 1.) From in or
around November 2008 through 2016, Gaver applied for and
obtained a line of credit and additional credit line
increases on behalf of GTI from Santander Bank, N.A.
(Id.) Subsequently, on December 5, 2017, a grand
jury indicted Gaver on eight counts of Bank Fraud, in
violation of 18 U.S.C. § 1344, and two counts of Money
Laundering, in violation of 18 U.S.C. § 1957, charging
him with knowingly and willfully devising, executing, and
attempting to execute a scheme to defraud Santander Bank and
obtain monies and funds under its custody and control by
providing materially false and fraudulent pretenses,
representations, and promises while seeking and obtaining the
line of credit and subsequent increases. (Id.)

Currently
pending before this Court is the Government's Motion
in Limine under Federal Rule of Evidence 401, or
alternatively Rule 403, to “preclude[e] the defendant
from advancing any contention at trial that negligence or a
lack of care on the part of the victim bank, or knowledge or
complicity on the part of any individual bank employee
involved in processing his loan requests, constitutes a
defense to the band fraud charges in this case.” (ECF
No. 31.) The parties' submissions have been reviewed, and
the Motion was discussed during a pretrial conference held on
July 16, 2018. For the following reasons, the
Government's Motion in Limine (ECF No. 31) is
GRANTED.[1]

The
Government has noted that evidence of negligence or lack of
diligence on the part of Santander Bank is irrelevant under
Federal Rule of Evidence 401 because such evidence is not a
defense to bank fraud. Alternatively, the Government argues
that if this Court finds that such evidence is relevant, it
is inadmissible under Rule 403 because its probative value is
substantially outweighed by the danger of confusing the
issues, misleading the jury, or wasting time. In Response,
the Defendant has argued that the Government's Motion
improperly seeks to limit the scope of Gaver's defense
and that “the bank's knowledge, negligence, or
complicity could be relevant” to other defense
theories. But the Defendant has failed to offer any
additional defense theories upon which this evidence may be
relevant.

The
Indictment charges the Defendant with committing bank fraud
“by means of false or fraudulent pretenses,
representations, and promises, ” and therefore invokes
18 U.S.C. § 1344(2). To prove bank fraud under §
1344(2), the Government must prove that the defendant (1)
“knowingly execut[ed] a scheme to obtain property held
by a financial institution through false or fraudulent
pretenses, ” (2) “did so with the intent to
defraud, and (3) the institution was a federally insured or
chartered bank.” United States v. Adepoju, 756
F.3d 250, 255 (4th Cir. 2014). The Government must also show
that the false or fraudulent pretenses were material.
Neder v. United States, 527 U.S. 1, 25, 119 S.Ct.
1827 (1999). The United States Court of Appeals for the
Fourth Circuit recently held in United States v.
Raza, 876 F.3d 604 (4th Cir. 2017) that the test for
materiality “is an objective one, which measures a
misrepresentation's capacity to influence an objective
‘reasonable lender,' not a renegade lender with a
demonstrated habit of disregarding materially false
information.” 876 F.3d at 621

Given
the elements of bank fraud and the test for materiality, the
Fourth Circuit has held that evidence of a fraud victim's
negligence or lack of diligence is not a defense to bank
fraud. In United States v. Colton, 231 F.3d 890 (4th
Cir. 2000), the defendant was convicted of several counts of
bank fraud after the Government presented evidence that he
failed to disclose material information to the victimized
financial institutions prior to obtaining loans to finance
commercial real estate projects. 231 F.3d at 894. On appeal,
he argued that one of the lenders failed to request certain
details prior to entering into the financing agreement.
Id. at 903. The Fourth Circuit explicitly rejected
this argument, explaining:

The susceptibility of the victim of the fraud, in this case a
financial institution, is irrelevant to the analysis:
“If a scheme to defraud has been or is intended to be
devised, it makes no difference whether the persons the
schemers intended to defraud are gullible or skeptical, dull
or bright. These are criminal statutes, not tort
concepts.” United States v. Brien, 617 F.2d
299, 311 (1st Cir. 1980); see also Neder, 527 U.S.
at 24-25, 119 S.Ct. 1827 (holding that “reliance”
and “damages” are not necessary elements of an
offense under the federal fraud statutes); United States
v. Stewart,872 F.2d 957, 960 (10th Cir. 1989) (same);
[Stuart M.] Speiser et al., [9 The American Law of
Torts] § 32.73 (“[T]he rule that fraud cannot
be predicated on a failure to disclose facts where . . . the
truth may be ascertained by the exercise of reasonable
diligence does not justify a resort to active deceit or
fraud.”).

Id.; see also Raza, 876 F.3d at 618 (4th
Cir. 2017) (quoting Colton for the proposition that
“the susceptibility of the victim of the fraud, in this
case a financial institution, is irrelevant to the
analysis”).

Further,
given the Raza court's conclusion that the
standard for materiality is an “objective
‘reasonable lender,' not a renegade lender
with a demonstrated habit of disregarding materially false
information, ” evidence of negligence or lack of care
on behalf of Santander Bank is also not relevant to
materiality. See Raza, 876 F.3d at 621 (holding that
the district court did not err by instructing the jury that a
particular fact is material if it “may be of importance
to a reasonable person, ” rather than requiring the
misrepresentations to be material to the specific fraud
victim); see also United States v. Wolf, 860 F.3d
175, 193 (4th Cir. 2017) (affirming the admittance of an
expert's testimony about mortgage banking practices and
whether certain categories of information would have been
material to lenders even though the expert had no personal
knowledge of the specific lenders involved because “the
test for whether a false statement to a bank is material is
an objective one; it does not change from bank to
bank”); United States v. Betts-Gaston, 860
F.3d 525, 532-33 (7th Cir. 2017) (explaining that whether a
particular lender or group of lenders “routinely
behaved unreasonably-that, as a matter of policy, they
ignored information that a reasonable lender would
consider” was irrelevant to materiality). Accordingly,
evidence of Santander Bank's negligence or lack of
diligence is not relevant under Federal Rule of Evidence 401
to whether Defendant Gaver committed bank fraud in violation
of 18 U.S.C. § 1344.

Turning
to the portion of the Government's Motion related to
knowledge or complicity on the part of any individual bank
employee, a showing of knowledge or complicity on behalf of a
lender or bank officer of Santander Bank would also not be a
defense to bank fraud. See United States v. Vinson,
852 F.3d 333, 351 (4th Cir. 2017) (“That [three bank
officials] were aware of all the loan terms is not a valid
defense for [the defendant] on the bank fraud conspiracy
charge, in that such bank officers were part and parcel of
the conspiracy to both defraud the banks and obtain bank
funds by false and fraudulent pretenses.”); see
also United States v. Jimenez, 513 F.3d 62, 74 (3d Cir.
2008) (“[I]t is not a defense to the charge that an
[account holder] colluded with [a bank officer] to commit
bank fraud. It is the financial institution itself-not its
officers or agents-that is the victim of the fraud [§
1344] proscribes.” (quoting United States v.
Waldroop, 431 F.3d 736, 742 (10th Cir. 2005) (internal
quotations omitted)); United States v. Gallant, 537
F.3d 1202, 1225 (10th Cir. 2008) (explaining that the
defendants were “not absolved from bank fraud by having
successfully recruiting BestBank officers and directors to
participate in their scheme”); United States v.
Abboud, 438 F.3d 554, 593 (6th Cir. 2006)
(“Finally, even if bank officials did approve of the
check kiting scheme, . . . this approval would not relieve
Defendants of criminal liability, because the victim is the
bank as an entity.”).

The
Defendant has not indicated how evidence concerning Santander
Bank and/or its employees' negligence, lack of diligence,
or knowledge or complicity in the alleged scheme is relevant
to whether he committed bank fraud in violation of 18 U.S.C.
§ 1344. As a matter of law, he may not argue that the
negligence or actions of any Santander Bank personnel negates
his own criminal intent. Accordingly, IT IS HEREBY ORDERED
this 19th day of July, 2018, that:

1. Government's Motion in Limine (ECF No. 31) is
GRANTED;

2. Defendant&#39;s Motion in Limine to preclude the
Government from publishing medical records of the Defendant
...

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